What are HUD Properties and How is the Auction and Purchasing Process Different?

U.S. Department of Housing and Urban Development (HUD) homes are residential properties that range in size from single family homes to 4-unit multi-family properties and have been acquired by HUD as the result of a foreclosure on a Federal Housing Administration (FHA) insured mortgage. HUD homes give individual homebuyers and investors an interesting buying opportunity. It should be noted, they do come with slightly different requirements than other property types on the Xome auction platform. In order to speed up the closing process, here are some things to know about buying a HUD home:

Winning bidders must select a HUD-registered title company with an existing Title ID#.

Earnest Money Deposit (EMD) requirements: Typically paid in the form of a wire transfer or certified check, earnest money is deposited into the title/closing company’s trust or escrow account where they are held until the sale of the home has been finalized, and then applied to the buyer’s down payment. For HUD properties, the amount to be submitted with each winning bid is as follows:

Extension requirements: In order to get an extension when buying a HUD home, you will need to make sure all your fees have been paid in certified funds, made payable to HUD, and no later than 5 days prior to the original close date. If you do decide you need an extension it’s important to know there could be a cost to this–when it’s charged, the cost is based on the purchase price of the home and must be submitted in increments of 15 days at a time.